Our Crushing Personal Debt

As usual, the Labor Day weekend has found politicians of both parties bragging about their devotion to working families. The emphasis is not misplaced, but the substance of their speeches is often suspect.

Here, for example, is a startling statement you are not likely to hear from anyone seeking office: "For the typical household, rising debt, not a rising stock market, was the big story of the 1990s. Household debt grew much more rapidly than household income in the last decade."

I did not know that, and my hunch is that you may not have been aware of it either. It is one of the thousands of facts embedded in a volume called "The State of Working America," a biennial report by three economists at the Economic Policy Institute in Washington.

The institute is a labor-funded think tank, and that sponsorship is reflected in some of the analysis. But Lawrence Mishel, its president, and co-authors Jared Bernstein and Heather Boushey buttress their arguments with data from the Census Bureau, the Federal Reserve Board and other establishment sources. And their emphasis on middle-class families is a welcome respite from all the stories about the ruin of corporate executives and the damage to people's 401(k) plans.

So much has been written about this becoming "a nation of stockholders" that the Dow Jones average has turned into the most popular index of Americans' well-being. It is important, but, as this study reminds us, jobs and wages and income are a lot more vital to most people than the state of their stock portfolios.

That is why the economic slump of 2001 and the slow-growth economy of 2002 are the central facts of life on this Labor Day. The main point of this analysis is that the hard-won, and often minimal, gains from the full-employment years of the 1990s are being jeopardized -- and in some instances reversed -- by the current stagnation.